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HMRC internal manual

Oil Taxation Manual

Decommissioning and abandonment: general decommissioning expenditure: relief for expenditure incurred after cessation of ring fence trade and on or before 11 March 2008


Prior to amendment in FA2008, CAA01\S165 provided for relief for abandonment expenditure where a ring fence trade had ceased on or before 11 March 2008. The conditions to be met were:

  • The ring fence trade had ceased.
  • Within a period of 3 years from the date of cessation, expenditure had been incurred on the decommissioning of an offshore installation or submarine pipeline.
  • Relief would have been due if the decommissioning had been carried out and expenditure incurred before cessation of the ring fence trade.
  • The expenditure was not otherwise deductible for tax purposes.

The relief is given by adding the qualifying abandonment expenditure to the qualifying expenditure for plant and machinery capital allowances purposes for the chargeable period related to the cessation of the ring fence trade. No election is required for this relief.

Expenditure after the 3 year period

Expenditure incurred later than 3 years after the cessation of the ring fence trade is ignored for the purpose of CAA2001\S165.

Non-ring fence trade continuing

Where the ring fence trade has ceased but a non-ring fence trade continues, the post cessation qualifying abandonment expenditure is added to the ring fence qualifying expenditure of the chargeable period related to the cessation of the ring fence trade.

Claiming losses

The time limit for a loss relief claim under CTA2010\S37 is extended from 2 years to 5 years to the extent it relates to a CAA2001\S165 adjustment (CTA2010\S43).